Please note: We are not attorneys licensed to practice law and we do not give legal advice or accept fees for legal advice.
A brief outline of Thai property laws:
Ownership of land in Thailand is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. Although ownership of a condominium is straightforward, ownership of freehold land by non-Thais is so restricted as to be extremely difficult.
However, there are legal ways for non-Thais to own buildings and to arrange long term leases. Also, to set up a Thai Limited Company structure to control
land interests in Thailand.
This information is intended as a brief guide to the options available to a foreigner considering buying property here in the Kingdom. Each case varies, so please contact us for more specific legal advice.
There are 3 main methods
Register ownership of the land in the name of a Thai national.
Set up a Thai registered company (limited liability) to own the land.
Register ownership of land in a Thai national's or Limited Company's name and draw up long-term leases with contractual agreements to renew. Terms are generally 30 years lease in multiples.
This option is obviously the quickest and easiest to arrange but is only suitable when there has been a long term relationship with the Thai nominee. The obvious drawback with this is that the land is not under your control and should the relationship deteriorate with the Thai national you will not be able to resell the land. At the same time a Will should be drawn up regarding the bequeathing of the property upon the death of the Thai national. This option requires a great deal of trust and we would recommend that you speak with yours or our attorneys before choosing it.
Forming a Limited Liability company to own the land is normally the preferred method. However it does require that all of the rules and regulations for the formation and maintenance of a Limited Company in Thailand must be adhered to. We can assist with all required aspects.
Under Thai law a Thai company means that foreign shareholding is restricted to 49% so the protection of a foreigner’s interests in Thai majority-owned company is arranged using several methods:
The Non-Thai land purchaser is elected as the only director with the exclusive mandate to sign cheques and commit the company to contracts (i.e. sell or buy the property). Introduce at the outset a system whereby an 85% majority of votes is required for any resolution on changing the structure of the company. Thai shareholders can also pre-sign share transfer certificates so that share ownership may be changed by the non-Thai at any time.
Our lawyers are expert at protecting the non-Thai’s interest and this has traditionally been a very secure and practical way to structure land ownership for non-Thais in Thailand.
There are bureaucratic issues with this method that need to be addressed such as annual accountancy requirements that will entail the payment of company tax, accountancy and audit fees. They are generally around 20,000 baht depending on property value and company structure.
Certain loopholes concerning company formation such as having a maid and your gardener as company shareholders have been closed by the Thai government so it is even more important to get the best legal advice from the outset.
An extremely simple method of property ownership for non-Thais is a structured lease holding.
This method is used to create a renewable leasehold ownership that gives the main advantages of Freehold Ownership such as:
- Security of tenure.
- Profit from asset appreciation.
- The foreign nationality may bequeath their asset when and to whom they choose.
When taking this option, the purchase of land and buildings on the land should be divided into separate contracts. Buildings can then be legally transferred to the non-Thai.
At the same time the leasehold agreement is put in place, various safeguards regarding the freehold are also established to ensure that the foreigner is totally protected. Again for full information on how this can be arranged, please contact us.
Land titles depend on their survey status. It is of course imperative that the authenticity of the land title documents is established from the outset. Our lawyers can initiate this for you.
The 'Chanoot ti din' (or just the 'Chanoot' as known by locals) are title deeds with the land accurately surveyed. This gives you absolute ownership of the land and is the most accurate and valuable land title.
Next in importance are the title deeds 'Nor Sor Sam' and 'Nor Sor Sam Kor'. They are deeds where clear records of ownership are maintained, and they can be sold or leased. However, they are not as accurately surveyed as Chanoot titles and it is critical that care is taken to confirm exact boundaries and measurements of the land.
Generally most titles outside what can be considered 'developed areas' are 'Nor Sor Sam' or 'Nor Sor Sam Kor' and can represent very good value. Under this circumstance, due diligence is crucial to definitely establish the boundaries.
After transfer the title is then converted into a Chanoot, which increases the value of the land.
This is a very brief outline of the Thai legal aspects of land property ownership by a foreigner in Thailand. Using our many years experience and expertise STETTCO will guide you through safely to ensure that your purchase is totally safe.
Please feel free to contact (button for email) us with any questions you may have.